2014 (3) TMI 659 - HC - VAT and Sales Tax

Detention of vehicle u/s 47(4) of the KVAT Act validity of order whether the petitioner can be termed as a defaulter - Held that - The purpose behind Section 47(4) is to meet the specific requirements with regard to the course to be pursued in the case of defaulters - Ext.P4 order was passed on the next date, i.e. 26.12.2013 - No valid order was in existence on 25.12.2013 , so as to have sustained the detention with reference to Section 47(4). The detention of the vehicle on 25.12.2013 w.r.t. Section 47(4) is not correct or sustainable in the eye of law - the vehicle and goods ordered to be released to the petitioner forthwith The authorities concerned to proceed with further steps under the relevant provisions of law - The authorised officer of the assessee shall execute a personal bond so as to cause release of the goods and vehicle - The petitioner shall produce a copy of the judgment along with a copy of the writ petition before the second respondent/CTI for further steps Decided in favour of assessee.

Summary

Issues:
Detention of goods under Section 47(4) of the KVAT Act based on alleged default of statutory dues.

Analysis:
The petitioner transported goods to the Canteen Stores Department, Cochin, but the vehicle was intercepted by the Commercial Tax Inspector under Section 47(4) of the KVAT Act for alleged default of statutory dues. The petitioner contended that no tax was due as the consignment was part of an Inter-State sale for the Defence Department. The detention was based on an order dated after the notice was issued, raising questions about the validity of the detention under Section 47(4).

The learned Counsel for the petitioner argued that the reason for not surrendering the 'transit pass' was an inadvertent mistake, and the amount claimed was not due. The petitioner transacts business only with specific entities in the state, further supporting their claim of non-default. The Government Pleader, however, disputed this, stating that the detention was justified due to attempts to evade tax, supported by prior notices and events leading to the order.

The Court examined the scope of Section 47(4) of the KVAT Act, emphasizing the need for officers to have reason to believe in tax non-payment or dealer default. The order supporting the detention was issued after the notice, raising doubts on the validity of the detention. The Court concluded that the detention on 25.12.2013 was not legally sustainable, setting aside the notice and ordering the release of the goods and vehicle to the petitioner. The authorities were allowed to take further steps if incriminating circumstances were found, and a personal bond was required for release. The petitioner was instructed to provide a copy of the judgment and writ petition to the Commercial Tax Inspector for further action.